₦airaland Forum

-Nigeria raises budget, adds $6bn debt as borrowing surge accelerates
-A fiscal balancing act amid infrastructure needs and revenue gaps or a deepening debt trap?
-Nigeria’s public debt hits record $103.94 billion amid fiscal pressures

The Nigeria’s National Assembly on March 31 approved an increase of the 2026 budget to $49.38 billion (₦68.30 trillion), a 17% increase from President Bola Tinubu’s original December 2025 proposal of approximately $40 billion (₦58.18 trillion).

The upward adjustment was justified as necessary to cover outstanding capital projects and avoid fiscal disruptions, while supporting the administration’s reform agenda of accelerating growth through higher infrastructure spending.

Concurrently, the Senate approved a fresh $6 billion external loan package, including $5 billion from Abu Dhabi’s First Abu Dhabi Bank for budget support and debt servicing, and $1 billion from Citi Bank/UK Export Finance for Lagos port rehabilitation.

This latest borrowing push comes as Nigeria’s total public debt reached $103.94 billion (₦153.29 trillion) as of 30 September 2025, according to the Debt Management Office (DMO). Domestic debt stood at $55.47 billion, while external debt was $48.46 billion.

Rapid debt growth over the last three years Nigeria’s public debt has expanded significantly since mid-2023:
-I). Mid-2023 (around the start of the Tinubu administration): approximately $59 billion (₦87.38 trillion).
-II). March 2025: around $97–100 billion (₦149.39 trillion).
-III). June 2025: $99.66 billion (₦152.39–152.40 trillion).
-IV). September 2025: $103.94 billion (₦153.29 trillion), reflecting a 7.7% year-on-year rise, largely driven by domestic borrowing.

Under President Tinubu (from May 2023 to September 2025), public debt rose by roughly $45 billion (₦66 trillion) in just over two years, averaging about $20 billion (₦29 trillion) annually.

By comparison, the previous administration (2015–2023) added roughly $52 billion (₦75.3 trillion) over eight years, or about $6.5 billion (₦9.4 trillion) per year on average. This accelerated pace under the current administration has drawn sharp criticism for its speed and sustainability.

The debt-to-GDP ratio has remained relatively moderate in official projections (around 34.7–39% for 2026 depending on GDP rebasing), but analysts warn that optimistic assumptions mask underlying vulnerabilities, especially with persistent deficits and high servicing costs.


Why Nigeria Keeps on Borrowing?
Nigeria continues to face persistent budget deficits rooted in structural challenges:

-1). Revenue shortfalls: Heavy dependence on volatile oil revenues combined with historically weak non-oil tax collection.

The 2026 budget projects revenue of approximately $23.5–24.5 billion (₦34–35 trillion) against total spending that now exceeds $49 billion (₦68 trillion) following the National Assembly’s approval, resulting in a deficit of around $17.25 billion (₦23.85 trillion) or about 4.28% of GDP.

Critics argue these revenue targets remain overly optimistic, setting the stage for even larger borrowing needs.

-2). Reform-Related Spending Pressures: Tinubu’s key policies; removal of fuel subsidies, foreign exchange unification, and tax reforms, initially triggered higher inflation and widespread economic hardship.

While intended to create long-term fiscal space, borrowing in the interim has bridged gaps for infrastructure, security, and social support, often without clear evidence of immediate revenue gains.

-3). Infrastructure and Capital Backlogs: The 2026 budget allocates a substantial portion (around $18.9 billion or ₦26.08 trillion in the original proposal) to capital projects in roads, rails, ports, power, and agriculture.

Capital spending remains high, yet execution rates have historically been low (around 26–30%), leading to repeated borrowing for projects that remain incomplete across budget cycles.

The newly approved $6 billion package reflects a mix of budget support, debt servicing, and infrastructure investment — signalling that a growing share of borrowing is being used to manage existing obligations.

How Previous Loans Have Been Used Nigeria has historically relied on multilateral institutions such as the World Bank and IMF, bilateral lenders including China, and commercial markets through Eurobond issuances.

Borrowed funds have supported infrastructure projects, including rail modernisation and power investments, as well as emergency financing such as the IMF’s $3.4 billion COVID-19 facility (now repaid).

However, a rising portion of new borrowing has gone toward recurrent spending and rolling over existing debt obligations rather than delivering transformative assets. In the 2026 budget framework, debt servicing alone is projected at around $10.6–11.3 billion (₦15.52–15.9 trillion), consuming roughly 45–50% (or more in some estimates) of expected revenue and about 27% of total expenditure.

This crowds out meaningful allocations for capital development, education, healthcare, and poverty alleviation. While some flagship projects have progressed, chronic issues of poor project execution, political discontinuities, inflated contracts, and governance inefficiencies have undermined the developmental impact of past loans.

Critics highlight that many infrastructure initiatives suffer from delays, cost overruns, and limited tangible benefits for ordinary citizens, raising questions about whether borrowed funds are being deployed with sufficient accountability and efficiency.

Economic Implications
1. Short-Term Pressures:
-I). Debt servicing now rivals or exceeds capital spending in impact, severely constraining resources for essential services like education, healthcare, and poverty reduction programs.

-II). Heavy domestic borrowing competes with the private sector for credit, keeping interest rates elevated and dampening investment and growth.

-III). Inflation risks persist despite some easing; sustained large-scale borrowing (particularly if any portion is indirectly monetized) could reignite price pressures and erode living standards further.

2. Longer-Term Risks and Opportunities:
-I). Sustainability questions: The high debt service-to-revenue ratio (approaching or exceeding 50% in projections) leaves little fiscal space. Any naira depreciation, oil revenue shortfall, or execution failure would sharply worsen the burden, increasing rollover and refinancing risks.

Opposition voices and analysts increasingly warn of a potential “debt trap,” where new loans primarily service old ones, mortgaging future generations with limited visible returns.

-II). Growth potential: Proponents argue that if funds are effectively channelled into productivity-enhancing infrastructure, non-oil revenue growth, and diversification, Nigeria’s projected GDP growth of around 4% for 2026 could materialise, supported by stabilising reserves.

However, repeated low execution rates and structural weaknesses cast doubt on this optimistic scenario.

-III). Intergenerational Equity and Governance Concerns: The current trajectory risks creating unsustainable fiscal strain with uneven benefits. Without radical improvements in revenue mobilisation (especially non-oil taxes), project delivery discipline, and anti-corruption measures, borrowing risks becoming a self-reinforcing cycle rather than a bridge to genuine reform success.

Nigeria is borrowing heavily because current revenues cannot support ambitious spending amid infrastructure deficits and reform transitions.

While the government’s strategy assumes today’s investments will yield tomorrow’s growth and revenue, persistent challenges in execution, revenue realism, and fiscal discipline raise serious concerns that the approach may instead deepen dependency, crowd out productive spending, and heighten long-term vulnerability.

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Subsidy is gone, MDAs are meeting target drive, yet the rudderless govt is mortgaging this nation into endless loans and debts. Meanwhile they are just looting the nation dry.

Borrowing to dualize highways and create new ones. Things that can not repay the debt well enough.
At the end, he will have excuse to toll existing highways being dualized along with brand new ones. More tax/tolls means more money for his empire when out of office. That's what tinubulation and tinubuonomics is all about. The guy who gets to milk everyone well after office time.

Tibunu has kept on borrowing with little or nothing to show for it...

They should be a cap limit on the amount to borrow. But we have a rubber stamp senate led by the Akpa that would do anything to please his master.


State governments should also be blamed and held accountable because they are just hiding behind tibunu/fg while being unaccountable and wasteful!

Racoon:
Subsidy is gone, MDAs are meeting target drive, yet the rudderless govt is mortgaging this nation into endless loans and debts. Meanwhile they are just looting the nation dry.

They will tell you Foreign Reserve has swollen considerably, forgetting there are many loans with deferred payment. The deferred loan repayment money is being redirected to swell the reserves on one hand and to slightly strengthen/defend the Naira on another, thereby buying them more valuable time to dig deeper the pit of economic destruction.

I was shouting it here for years

How can you borrow money to build infrastructure that require even more money you don't have to run and be maintained how does it make any sense?

APC don't understand the fundamentals of developmental economics, now they need to borrow pay back the loans Buhari took to build near useless infrastructures

Am I saying infrastructures or bad or not needed? Absolutely not.. But building them with borrowed money would only make you poorer

APC is a curse and a canker to Nigeria.

Racoon:
Subsidy is gone, MDAs are meeting target drive, yet the rudderless govt is mortgaging this nation into endless loans and debts. Meanwhile they are just looting the nation dry.

Na the fuel subsidy pain me pass. He just made a careless speech and plunged an entire country into chaos.


Very careless fellow - careless in speech and actions.

In the end, those who voted in support or against the government will suffer it. While those who voted in support will cry in silence and shine their teeth publicly without shame, those who voted against will proudly attest to the fact that they really made efforts to warn the public.

I always wonder that a country that's blessed with abundant natural resources will be borrowing every year.

These APC people are just borrowing money they can use to buy votes. Take it or leave it. Escobar cannot win a free and fair election

Omo $20bn each year? Even with increased revenue? Where was these monies spent on?

What do you all understand and expect from a faaaake certttifficcate hollldderr who snatched and grabbed Lagos state while being called a faaaake guru str*tegist by coven of mandate snatchers kum teeeeves

However, a rising portion of new borrowing has gone toward recurrent spending and rolling over existing debt obligations rather than delivering transformative assets

Money for campaign 🤷🏿, 2025 budget still dey one chance. Contractors yet to be paid.

Why Nigeria keeps borrowing?
Misappropriation of resources.

What is Wike doing with all the houses he is building for Judges? The $50k each he is bribing them with?
And about the cars?

Listen.

The problem is we are not able to hold leaders accountable. Simple.

I lived in the Philippines. A country with minimal natural resources and I could tell you how those leaders think. They love their countries and make decisions in the interest of their countries first. Of course there is corruption but not in the scale we see in Nigeria.

Nigeria is like a Rich orphan. No body likes her but everyone wants to be incharge because of personal interest

Tinubu does not care about the debt crisis...... It's not his problem, it's Nigeria's problem..... He would be long gone, the debt would be paid by future generations......

When he already stole enough, to secure his tinubu's lineage......

The current borrowing that is partly tied to the rehabilitation of Lagos Port to me doesn't make any sense.

The government should spend the fund to reliabilitate other ports and in the process decongesting that port , creating balance and extending development to other parts of the country.

CodeTemplar:
Borrowing to dualize highways and create new ones. Things that can not repay the debt well enough.
At the end, he will have excuse to toll existing highways being dualized along with brand new ones. More tax/tolls means more money for his empire when out of office. That's what tinubulation and tinubuonomics is all about. The guy who gets to milk everyone well after office time.

The govt should be borrowing to build Beer factories? Pls come and see a typical shallow Nigerian youth.
This is exactly what your govt should be doing with borrowed money.
You borrow to build capital projects not to pay salaries like under Jonathan.
All the western countries that all of you want to run to uses borrowed money to build capital projects like Airport, rail, road etc.
When you creat such environment it will then lead to others to come and invest in such environments which will eventually lead to jobs and more taxes for thr govt in thr long run.
This is how real capitalist flourishing economy works.
You should not care if they borrow but worry about what they use the money for.
If they are using thr money to build such capital projects, then your future is secured.

Doing worse of what he condemned others of doing is the signature of Tinubu government.

They keep announcing that they have exceeded their Revenue Target, everyday you see an encampment of Owed Contractors and Retirees in front of Federal Ministry of Finance.
When people talk, some fools here will term them Wailers and Sore Loosers!
If you can support irresponsibility because of stipends, as the country is been destroyed, your children will urinate on your grave.

What are these infrastructure that to me they hide behind to borrow for.

How critical are they, can they be funded otherwise and how much of a business model do they fit in.

These are the issue that should be debated in my opinion. Nigerians must participate actively in how and on what their money is spent.

PS: 30 billion was allegedly spent on the renovation of the ICC in Abuja. We were told it will be run as a commercial venture supposedly to recoup the enormous resource outlay. How much has been recovered to date and what are the guarantees.that the taxpayer will not have to pay for that place again.

97 Trillion naira borrowed within three years!!! Na wa o. Make these people fear God na.

Now they are borrowing to repay interest from previous loans. This is a death spiral.


What is the DMO even there for?

brain54:
Tibunu has kept on borrowing with little or nothing to show for it...

They should be a cap limit on the amount to borrow. But we have a rubber stamp senate led by the Akpa that would do anything to please his master.


State governments should also be blamed and held accountable because they are just hiding behind tibunu/fg while being unaccountable and wasteful!

I agree completely with your point on SG. Maybe Nigerians focus too much on the FG. What are the states doing with the now ‘always celebrated high FAAC Allocations’ arising from the subsidy removal? Seems the allocations are personal properties of the governors or their shares of political jamboree!

Nigeria is cursed with Tinubu

A failure who has borrowed more than his predecessors without paying subsidy

Very simple, we don't have money. We think we do.
Simple analogy. You're earning 100,000 but you want to buy a car as it'll bring more productivity for you, make your life easier and probably earn you a little more income. You can decide to keep saving 10,000 monthly or get a good credit facility.
We need good roads, electricity, tech advancement, solved insecurity challenges, increased welfare conditions but don't want the government to borrow. SMH.

The rate of borrowing is unbelievable, moreso with subsidy gone.

At this rate by the time Tinumbu does a second tenure Nigeria will probably be sunk in debt.

We are not even seeing or feeling where the whole money is going.

With all the money borrowed still we don’t have have uninterrupted power supply?

Tulumbu is mumunizing Nigeria, let’s be patient… let’s give him till 3034 he’ll pay back all the debts…

Image123:
Very simple, we don't have money. We think we do.
Simple analogy. You're earning 100,000 but you want to buy a car as it'll bring more productivity for you, make your life easier and probably earn you a little more income. You can decide to keep saving 10,000 monthly or get a good credit facility.
We need good roads, electricity, tech advancement, solved insecurity challenges, increased welfare conditions but don't want the government to borrow. SMH.

'...we don't have money...' - why don't we have money.

'...you want to buy a car...' - who decides you need a car.

'...more productivity...make your life easier..' - who's life, who are the 'we'

'....and probably earn you a little more income...' - how much income has been earned from the loans over the past years - a question for the citizens to ask and for the international and local lenders to answer.

This is how simplistic the government wants us to think. But does all these happen in reality. Such that the first question, 'why you don't have money's doesn't become a permanent feature of our experience as Nigerians from the day we are born till the day we die.

Thee is NEVER enough money for a waster.
Spending is the problem with this nation.

I do sincerely hope one day we can get the kind of leadership that can till the ground of this country and harvest the wheat that will bake the bread of development. Because this is just not how great nations are built.

Let's not forget. This government still can't account for 1.1 billion dollars in borrowed funds.